June 22nd, 2009
HP connects IT investment, value, and transparency
Last week, I attended HP’s Software Universe 2009 conference to participate on a panel discussion around success strategies for deploying project portfolio management (PPM). I used the opportunity to speak with HP executives about their vision for the future of PPM and its relationship to enterprise value creation.
To understand the company’s PPM product direction, I spoke with four folks representing HP’s views on features, strategy, and customer implementation:
- Paul Muller, VP for Strategic Marketing
- Ken Cheney, Director of Products, IT Financial Management
- Bruce Randall, Manager of Product Marketing, PPM
- John Wills, Practice Principal for HP’s Business Intelligence Solutions group
HP’s primary strategic message about the future direction of PPM involves helping IT departments improve their ability to quantify project costs, benefits, and derived value, which Paul described this way:
We automate the spreadsheet Kung Fu that IT often uses to analyze financial data. Our goal is reducing decision-making cycle times and creating transparency that quantifies the business value of IT operations.
Ken Cheney elaborated on this message:
Many organizations find it difficult to get an accurate handle on IT costs. We link IT with the business services it delivers and assign value to help IT appropriately price these services. The future of PPM is helping organizations clearly see the total cost of ownership of all IT services.
HP’s strategy positions PPM as a building block in a broader IT financial management offering, as the following diagram illustrates:
June 10th, 2009
Senate IT oversight bill: Detailed analysis
Senator Thomas Carper’s [D-DE] proposed IT oversight legislation (S.920) is a well-intentioned and important step toward reducing wasteful spending on mismanaged IT projects. However, the bill has substantial weaknesses that will likely compromise its effectiveness and perhaps create even more bureaucratic waste.
Following my previous blog post on S.920, a Senate staffer working on the legislation contacted me with a request to comment on the bill. Given the critical nature of this issue, potentially involving billions of dollars, I welcomed the opportunity to do so. This post summarizes my initial comments, and serves as a basis for initial discussion with that Senate staff member.
This post is unusual for several reasons:
- To my knowledge, the Senate does not often ask a blogger to serve as an expert commenter on pending legislation. In this case, my background in IT failure analysis and prevention is the defining factor.
- This post may be confusing without also studying actual full text of the bill. Usually, I attempt to make posts standalone from the original sources. Not so in this case.
- This post includes lots of detail and few overview perspectives, making it hard to read. In a sense, this post is a brain dump that I thought some readers might find interesting. My thoughts on this bill are still in formation, so this post truly remains in progress.
- This post is just not well-written. Although it pains me to publish notes rather than polished text, that’s the best I can do now, given the time constraints of my own busy schedule.
Despite its shortcomings, I support this initiative and do not accept the argument that the bill does nothing except create additional bureaucratic overhead. As my comments below make clear, the bill will not accomplish its objectives without further refinement. However, even in its present state, the legislation raises the profile of important issues around IT project failure and waste.
THE PROJECT FAILURES ANALYSIS
The remainder of this post presents comment on each section of the bill.
May 6th, 2009
Research: Gov't lacks oversight on services contracts
Rigorous contract management is a basic and crucial element necessary to successfully oversee procurement and execution of complex projects. However, new research from the UK Public Accounts Committee, a monitoring group within Parliament similar to the US Office of Management and Budget (OMB), states the UK government mismanages services contracts on a large scale.
Although based on UK data, the lessons should also be applicable to US government projects. The report, titled Central government’s management of service contracts, offers this summary [edited for length]:
[The] central government makes limited use of financial incentives to encourage suppliers to improve performance. In addition, 38% of contract managers did not always apply financial penalties where suppliers under-performed. The extent to which central government tests the value for money of ongoing services and contract changes is variable. For example, 41% of contract managers had not tested the value for money of new services purchased under an existing contract.
Planning and governance is one of the weaker areas of contract management, although there are examples of good senior level engagement. Less than half the organizations surveyed, however, had an individual with overall responsibility for contract management, and there was no documented plan for managing 28% of contracts. [M]any contracts do not have in place some or all of the elements of good practice risk management; for example, 56% of contracts did not have a contingency plan in case of supplier failure and 30% of contracts where suppliers were dealing with personal or security information did not have a risk register.
April 14th, 2009
7 (nasty) truths about IT spending
An article in the March issue of Harvard Business Review, written by former CIO Susan Cramm, discusses harsh realities associated with out-of-control IT costs. Although cost containment is integral to reducing failed IT projects, the article suggests a certain Draconian inflexibility that just doesn’t make sense.
The article includes a sidebar called “The Seven Truths,” reflecting Susan’s position that, “companies overspend on IT because they are unwilling to say no to frontline managers.” Here are the seven truths (reformatted from original):
- Enhancements often don’t deliver results commensurate with their costs. Establish a fixed budget for IT enhancements for each function or division, in line with the goals they are expected to achieve. Do not extend funds. When they run out, they run out.
- Projects are often too big and take too long, partly because unnecessary functionality is built into applications. Require leaders to commit to delivering measurable value for application functions before granting them project approval and before allowing them to maintain funding at each stage. Tie executive compensation to realization of value.
January 27th, 2009
5 tips to reduce outsourcing risk
Service providers present a special challenge to organizations involved with complex IT projects. Although consultants are integral to many projects, dysfunctional service provider relationships can increase the customer’s risk of failure.
To explore this issue, I spoke at length with Alec Miloslavsky, CEO of Exigen Services, an outsourcing supplier that specializes in Agile development. I asked him why traditional relationships with system integrators sometimes cause a gap between customer goals and consultant interests:
Traditional consulting companies base their relationship model on labor arbitrage, where the services provider gains financial benefit primarily from differences in labor costs. As a result, the consulting firm neglects key issues in IT project delivery, increasing the customer’s risk.
Alec added that projects generally face three types of risk:
- Financial risk, where project cost rises above expectations
- Time to market risk, where the project is late
- Delivery risk, where the project doesn’t achieve planned objectives
Pure labor arbitrage contributes to all these problems, especially in environments where there is insufficient governance to control results.
I asked Alec for five tips to help services customers get the most from their relationship with external consultants. Here is his list:
January 13th, 2009
Miami-Dade school district and Deloitte: 'Endless money pit'
Deloitte seems to hit the IT failures radar with some frequency. Miami-Dade school district’s (MDCPS) SAP implementation is the most recent Deloitte project to come across my desk. Although this implementation is clearly running late, the extent of delays is ambiguous.
Teachdade.com notes:
December 12th, 2008
IT failures town hall: Jan 7 (via phone conference)
Weather Update 1/7/09: Due to the coming snow storm and our concern for your safety, the town hall will be held via phone conference. The dial-in phone information will be emailed to everyone who registered. If you haven’t registered and would like to attend the phone call click here. The phone event will take place 8:00-9:30AM EST on Jan 7, 2009.
Come join fellow ZDNet blogger and world-famous CRM analyst and guru, Paul Greenberg, and me for an informal IT failures chat in Boston. Paul and I are taking the IT failures discussion into the real world for an old-fashioned town hall get together.
There’s no cost and you’ll meet other folks interested in creating and running successful IT projects. This interactive, unconference-style session will be fun and informative; Paul will serve as discussion initiator to kick things off. It’s not going to be lecture, but rather an interesting and engaged discussion among friends.
Topic: IT Failures Town Hall: Lessons to be learned so you can stay off the list
Session description: As the economy worsens, many organizations have developed higher expectations and less tolerance for failed projects. We’ll discuss strategies for reducing failures, increasing project success rates, and demonstrating higher project value. Most of all, we plan to have a great time!
December 3rd, 2008
5 steps to cut IT budgets wisely
For many folks, economic planning these days has become synonymous with reduced spending; often, determining cutbacks is even more painful than budgeting. No, the chopping block isn’t a fun place to be.
That said, here are five reasonable things to consider when cutting budgets. The list comes from John Halamka, CIO of CareGroup Health System and Harvard Medical School:
December 2nd, 2008
'IT has no inherent value'
The rather catchy title for this post comes from an academic research paper stating that IT offers no value apart from the business benefits it supplies.
Because this value is hard to measure, many folks simply fabricate business benefits to get their project through the approval process. These people build IT projects like a house of cards ready to tumble down in the failure to deliver anything useful back to their organization.
The paper, titled Managing the Realization of Business Benefits from IT Investments, describes how this happens:
Management practice provides some insight as to the origins of this inability to deliver business benefits. When considering return-on-investment (ROI) calculations, organizations are too pre-occupied with manipulating the denominator – reducing spend, and are failing to focus on how deploying IT can create business value and deliver significant benefits to the organization.
The authors suggest that many project proposals inflate the business benefits:
November 18th, 2008
Texas gov. intercedes in failing IBM project
Texas Governor, Rick Perry, ordered state agencies to stop transferring data to IBM to prevent data loss on a failing project. Texas also fined IBM $900,000 for failing to meet data backup requirements specified in the state’s $863M outsourcing contract.
This backup situation represents only tip of the iceberg with lots more failure to come. Be forewarned: as they say, “You ain’t seen nothin’ yet.”
The Dallas Morning News reported:
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter. See his full profile and disclosure of his industry affiliations.
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